Following up on another reader’s request, in this blog post we’ll be looking at Assignment of Benefits (AOB) and how courts handle them in Iowa.
In Iowa, “[a]t common law, an insured was prohibited from assigning its insurance policy and underlying rights.”1 However, the law has changed, and it now, “generally favors the assignability of choses in action, and courts have permitted the assignment of insurance policies under statutes providing for the assignment of contracts in exchange for a money payment.”2
Additionally, Iowa permits the insurance carriers to “impose conditions in the terms of the policy on an insured’s ability to assign its rights under the insurance policy,” such as “the requirement to obtain the insurer’s consent before granting an assignment,” and most insurance policies, “particularly those regarded as personal contracts, such as fire insurance and liability policies, are not assignable prior to loss without the insurer’s consent.”3
Concerning post-loss assignments, the Supreme Court of Iowa held that an insured may assign their interest to any claim under an insurance policy after a loss occurs.4 Additionally, the Court noted that “even if the provision had specifically prohibited post-loss assignments, it would most likely be in contravention of public policy and the general purpose of indemnity contracts.”5
If you have any specific questions on AOBs or would like to see your state come up sooner, please comment below, or send me an email at firstname.lastname@example.org.
As always, I’ll leave you with a (mildly) related tune, here’s Iowa’s own, Glenn Miller with his Orchestra and their hit, In the Mood:
1 Conrad Brothers v. John Deere Ins. Co., 640 N.W.2d 231, 236 (2001) citing 43 Am.Jur.2d Insurance § 789, at 851 (1982).
2 Id. citing Iowa Code section 539.1 and Iowa Code § 539.1 (1997) (assignment of nonnegotiable instruments).
3 Conrad Brothers, 640 N.W.2d at 236 (internal citations omitted).
4 Id. at 237 citing Welch v. Taylor, 218 Iowa 209, 212, 254 N.W. 299, 301 (1934) (may assign interest to any claim under the insurance policy after the loss occurs).